Tuesday, April 28, 2009

Two of Britain’s iconic cars, Jaguar and Land Rover, are expected to make their official entry into India in 2009.

The India foray of the two brands, which debuted in 1922 and 1948, respectively, has been hastened by their new Indian owner, Tata Motors, which took over in 2008 from Ford Motor Company of the US.

A JLR spokesperson confirmed the imminent entry of the models in India and said, “We’re still finalising plans, but the likelihood is within a few months. I can’t be more precise simply because the exact timing will be dependent on how the planning goes.” The spokesperson said Tata Motors would be the distributor of these brands in India.

India is the only country among the Bric nations (Brazil, Russia, India and China) that is yet to see the entry of these two brands.

Since both are expected to be sold in India as fully built imports from the UK, their price will suffer a 110 per cent mark-up due to Customs duty. Two other German luxury brands, Daimler and BMW, against whom JLR will compete in India, have the advantage of having their assembly plants in India.

In the UK, the all-terrain (4x4) Land Rover sells in the range of £23,000-63,000 (Rs 17-46 lakh) while sports luxury Jaguar sells at £21,000-82,000 (Rs 15-60 lakh).

“Because our volume will initially be fairly low, it will be a case of seeing how things develop. Who knows what could happen in the future if there is a strong demand? For the foreseeable future, though, we will be concentrating on establishing the brands properly in India,” said the JLR spokesperson.

Singapore-based Mohit Arora, senior director at JD Power Asia Pacific who oversees the India operations, said, “The market will be very limited for JLR in India, but it must be seen more as Tata Motors displaying its flagship brands. Bringing the brands to India is one, but they must also be looking at making some profit out of it and be able to service once they start selling it.”

He added that at price points after paying Customs duty, the addressable market for both Jaguar and Land Rover is less than 1 per cent of the 1.5 million car market in India.

Monday, April 20, 2009

UK’s venerable paper The Guardian on April 15, 2009 updated its website with 9 video footages of policing excesses witnessed on April 1, 2009 during the G-20 protest near Bank of England headquarters. The death of an innocent newsagent Ian Tomlinson during the protest triggered a wave of witnesses coming forward to share their own shot of police using excessive force to manage the crowd.

Tomlinson had died of a heart attack at the protest scene and was first believed to be a victim of a situation no one in particular can be blamed. But days later, after the G-20 leaders had gone back home, a video sent to The Guardian by a New York fund manager shot using his mobile phone camera revealed that Tomlinson was actually pushed around by a cop before he collapsed and died on the street. Independent Police Complaints Commission is looking into this matter.

A couple of days back yet another video emerged that showed another cop actually slapping a lady protester before hitting her with his baton. This smart lady now has a PR manager appointed to manage her interviews with the media. And guess who is this publicist who is helping her – it is Max Clifford who handled late Jade Goody’s public relations!

The irony of this situation is that all these video footages have come from private citizens using their not-so-sophisticated mobile cameras. No official video of the police excess is out in the public domain yet. After all the cops were given cameras and even got a vantage point perched up high pedestal shooting the protest scene. I was there at the G-20 protest (as a journalist of course) and am not imagining these things.

Britain’s penchant for placing cameras in public places is now world famous. On the basis of an outdated statistic (as old as 2002), there are at least 4.2 million CCTV cameras in public places in the UK. This means there is one camera for every 14 people in the UK. The walking tour guides tell that on an average, while you are on the streets of London, you are shot by one of these cameras some 300 times a day!

Yet how the cops near Bank of England during the G-20 protest manage not being shot on one of their own cameras is a miracle in itself. Or weren’t there enough CCTV cameras at the protest venue? That is hard to believe given the protest was happening right outside Band of England headquarters. Personally I cannot think of a more vulnerable spot in all of the UK, every inch of which needs to be watched.

Sunday, April 12, 2009

The Sunday Times reports Tata Group has agreed in principle to invest £100m alongside refinancing.

After months of dogged lobbying, Tata Group-owned British car maker Jaguar Land Rover (JLR) is now close to clinching a loan of £800 million (Rs 5,840 crore) from a syndicate led by Royal Bank of Scotland and Lloyds, according to The Sunday Times here.

The paper further reported today that Tata Group has “agreed in principle to invest another £100m alongside the refinancing.” A JLR spokesperson, however, said the report was speculative.

The report also said the UK government has apparently agreed to guarantee up to 75 per cent of the £340 million loan that European Investment Bank (EIB) had approved last week, to develop environmentally-friendlier cars. JLR is expected to place its assets (properties, factories and stocks of cars) as a security for the balance 25 per cent.

If JLR indeed manages to secure this loan, it would come as a major relief for the cash-short firm. Group chairman Ratan Tata had, last month in a television interview, openly said that if flow of money into JLR continues to be an issue, “the damage is going to be quite devastating”, with possible job losses and temporary closure of plants.

Despite the economic recession and the falling sales of automobiles here, JLR has been seeing some positive developments lately. Last week saw formal approval of the EIB loan. In February, it got a £600 million order for supplying 13,000 cars to Chinese buyers over the next three years.

Despite these positive developments, operations continue to be under stress for want of capital, which a loan of £800 million can sufficiently address. JLR has three major plants in the Midlands — Castle Bromwich makes the Jaguar XF, XF and XJ, Solihull makes the Land Rover Defender and Discovery 3, the Range Rover Sport and Range Rover; and Halewood makes the Jaguar X-TYPE and Land Rover Freelander 2. In all, the company employs close to 14,500 people and an estimated 60,000 people are employed by 200 of its parts suppliers.

Saturday, April 11, 2009

The Rs 2,500 crore infusion by the European Investment Bank may not be enough.The mood inside the Tata-owned Jaguar Land Rover (JLR) continues to remain sombre despite the European Investment Bank (EIB) last week approving £340 million (Rs 2,500 crore) to support the company’s development of greener cars. This is understandable considering the company is constantly knocking at the doors of the UK government for money to run its business and not just for investing in cutting-edge technology.

Since the Tata Group took over the two iconic brands in March 2008 from Ford, it has reportedly pumped in several million pounds. But the company needs more. In short, the financial support from EIB will not help the car maker to manage its show and make sure 14,500 workers continue to remain employed.

Industry observers believe that saving JLR is crucial not just for these workers but also for the UK automotive industry as well as the UK government. David Bailey, Birmingham Business School professor and Chair of the Regional Studies Association, said: “JLR (at £400 million) invests half of all the R&D investments in the UK auto industry; now there is another £800 million it plans to invest in green technology. Apart from the 14,500 people in the company, 60,000 work for the suppliers. The company contributes £1.3 billion (to the government coffers) as value-added tax, national insurance and other taxes. It makes a lot of sense (to save the company).”

Despite the uncertainty that lingers, the 2,000 workers at Jaguar’s mother plant in Castle Bromwich can be seen going about their work at this 112-acre plant that dates back to World War II. This plant mass-produced the Spitfire and Avro Lancaster aircraft which contributed to the success of the allies.

Adrian Prentice, a veteran worker at Castle Bromwich, said he was glad that EIB has agreed to provide the money. For a man who has spent a little over three and a half decades in the company, the current gloomy situation does not bother him. He was confident JLR will soon see better days. “During my days here we must have collapsed some five or six times. But we have managed,” he said, waving at the all-aluminum Jaguar skeletons that are getting ready to be finished and shipped all over the world.

Bailey on the other hand said the situation is far from a mere blip in the otherwise smooth growth graph. “This is the worst I have seen in the auto industry, extremely serious.” But, unlike the troubled General Motors, he added, JLR was a well-managed company. Till the recession caught the world in its deadly grip, it did make an operating surplus. “Without the (UK) government’s help, JLR will not be able to access money and faces being damaged,” he said.

The situation in Birmingham did not completely reflect the economic situation in the UK or its auto industry. It is still a city getting ready for Easter Holidays. Business in fuel stations and department stores is normal. A manager at Tyburn House, one of the oldest liquor-cum-restaurants in region, said sales have slipped in the last few months. He thinks this may have something to do with temporary workers (called agency workers) in JLR losing their jobs in the recent months.

Meanwhile, workers in JLR like the rest of their counterparts across UK were seen putting their economic worries to a temporary rest and get ready to enjoy the long Easter holiday. After all it will be business as usual from Wednesday and there will be plenty of time to fret about the future.

Tuesday, April 7, 2009

The board of Luxembourg-based European Investment Bank (EIB) today approved a Euro 100 million (Rs 664 crore) loan to Volkswagen India to part-finance its Euro 580 million (Rs 3,900 crore) investment in India. This investment by Volkswagen India will be for its new plant in Pune in Maharashtra that will have a capacity to produce 110,000 cars a year at full capacity.

VW India had formally inaugurated the plant on March 31. It is expected to start commercial production by May this year.

A VW India spokesperson said the inauguration of the plant did not mean that the proposed investments had been completed. “There is no contradiction between the fact of inauguration and a loan under progress. An investment process is not finished with an inauguration. As you know, we will start production in May (2009) with the Skoda Fabia, followed by the Volkswagen Polo in the beginning of the next year and a Volkswagen sedan in the second half of 2010,” said a VW India spokesperson in an e-mail response.

The group entered the Indian market in 2001 with Skoda and followed this with the launch of its premium and luxury brand, Audi, in 2004. The entry of the mother brand, VW, was finalised in 2006 with plans to set up a new plant in Chakan near Pune.

The approval of the loan to VW India will mark the European bank’s first major direct investment in a plant in India. EIB’s exposure in India has until now been dominated by support to EXIM Bank. In December 2008, EIB approved a Euro 150 million loan to EXIM Bank to support energy companies’ investments in renewable energy projects. EIB’s first exposure in India dates back to 1993, when it supported Power Grid Corporation’s effort to upgrade the national grid.

The board of the Luxembourg-based European Investment Bank (EIB) today approved a £340 million (Rs 2,500 crore) loan to the Tatas-owned Jaguar Land Rover (JLR) to support efforts to make low-emission cars.

A JLR spokesperson said the loan would support the company’s significant investments in environmental technologies that were crucial for the future (part of a total commitment of over £800 million, that is, Rs 5,900 crore).

In all, the board today cleared loans worth ¤866 million to fund research and development in Europe to make cleaner vehicles. Among others, Nissan’s European operations have been sanctioned a loan of ¤400 million for efforts to produce clean cars in the UK and Spain.

A JLR spokesperson said, “Access to funding is subject to a number of due diligence and commercial loan criteria, including partial backing by the UK government’s guarantee scheme.”

The loan to JLR comes under a scheme under which the UK government provides a guarantee for loans from EIB to the automotive sector for work to reduce emission.

Saturday, April 4, 2009

To take action against non-cooperative jurisdictions, including tax havens

The G20 members, comprising 21 of the world’s wealthiest nations and nine international institutions, today announced a $1.1 trillion stimulus package to tackle the worst economic recession since the Great Depression.

The summit also agreed to take action against non-cooperative jurisdictions, including tax havens, and impose oversight on large hedge funds and credit rating agencies.THE FINAL PUSH

* Main points in the declaration ‘Strengthening the Financial System’ issued by G20 on Thursday: * Establishment of a new Financial Stability Board (FSB) as a successor to the Financial Stability Forum (of which India became a member recently) * FSB to collaborate with IMF to provide an early warning of macroeconomic and financial risks * Take action against non-cooperative jurisdictions, including tax havens * To extend regulatory oversight and registration of credit rating agencies

“We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs that would otherwise have been destroyed. It will, by the end of next year, amount to $5 trillion, raise output by 4 per cent and accelerate the transition to a green economy,” said UK Prime Minister Gordon Brown, the chairman of London Summit 2009, before even taking into account the extra commitments from the summit.

Brown said agreements had been reached today to treble resources available to the International Monetary Fund (IMF) to $750 billion, to support a new SDR (Standard Drawing Rights) allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs (Multilateral Development Banks) to ensure a further $250 billion of support for trade finance, to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, and constitute an additional $1.1 trillion programme of support of credit, growth and jobs in the world economy.

The G20 also affirmed its commitment to the World Trade Organization, supporting free trade and a check on protectionism by its members. Additional trade finance of $250 billion over the next two years will be made available through export credit, investment agencies and MDBs.

Brown’s statement came when there was an overall scepticism over the success of this G20 summit in reaching any concrete agreements over what is good for the global economy.

An immediate fund flow of $240 billion to IMF will come from three sources, of which the European Union and Japan will contribute $100 billion each and China a further $40 billion.

Brown said that other members of the IMF (which include India) too will provide additional funds to the IMF over the coming months.

Though the London Summit was a follow up to the G20 meet in Washington last year, today’s meeting assumed far greater importance in the light of collapse of the global financial system over the past few months. The overall agenda of this meeting was to find ways and means to overcome the global recession and impose stricter regulations over the global banking sector.

Wednesday, April 1, 2009

Protestors in thousands marking “Financial Fools’ Day” marched from all over London and converged outside the Bank of England headquarters today. The city will play host to the G-20 meeting (officially known as the London Summit) tomorrow.

Leaders and heads of central banks from over 20 countries will attend the summit to discuss ways and means to combat the current global financial crisis.

Indian Prime Minister Manmohan Singh will be participating in the meet and is expected to be among the five national leaders who will meet US President Barack Obama tomorrow.

The protest march today condemned the global financial meltdown and the ways banks all over the world were functioning. Anti-war supporters also took part in the march in large numbers.

Despite the extra precaution taken by city administrators and the Met (London Police), protestors outnumbered the police by several times. The high-decibel protest, however (until this report went to print), went off peacefully. Expecting the protestors to storm the city today and tomorrow, the Met has cancelled leaves of all its officers, keeping thousands of officers ready for deployment if matters go out of hand. An estimated £7-10 million is being spent by the Met on the security arrangements.

Over a dozen groups from all over London converged outside UK’s central bank headquarters around 11 am. Though the general battle cry was against bankers, peace marchers protesting the war in Afghanistan, Iraq and West Bank too participated. Placards seen at the march ranged from simple messages like “Democracy is an illusion” to profane messages that condemned the global financial crisis.

UK Prime Minister Gordon Brown and Chancellor Alistair Darling were the most popular targets among the protesters. Interestingly, US President Barack Obama, who is now in London on his first foreign visit since he assumed office in January this year, was spared by protestors.

Though the protest was conducted on the eve of the G-20 summit in London tomorrow, April 1 (popularly known as the Fool’s Day) is also celebrated as the Financial Fools’ Day. This is also the day when many institutions in Europe and Asia open their books of accounts afresh for yet another financial/accounting year.